Home music industry Bank of America cut private prisons weeks after loaning to one person

Bank of America cut private prisons weeks after loaning to one person


Bank of America Corp.

BAC -0.21%

said last week he would stop doing business with private prisons. What the bank did not say: It had recently agreed to lend $ 90 million to one of the largest companies in the industry until 2024.

Today’s bankers want to do more than lend to creditworthy borrowers. Encouraged by employees, executives use their trillion dollar balance sheets to influence company behavior. Many large shareholders support this approach.

Activists have also relied on banks to fend off some companies, sometimes showing up outside branches and in CEOs’ homes. Housing advocates show up at annual meetings to urge lenders to do more for needy communities. Environmental groups have challenged loans involving the Dakota Access Pipeline.

But cutting ties with entire industries has proven difficult. The Bank of America’s announcement last week followed promises to stop lending to certain fossil fuel companies and gun manufacturers. But due to pre-existing relationships, the bank is in the process of extending credit to some of them for years to come.

“The private sector is trying to respond to public policies and to government needs and demands in the absence of long-standing and widely recognized necessary reforms in criminal justice and immigration policies,” the bank said in a statement. “Clients affected by the policy have unique circumstances and long term relationships are often involved”

Protesters line up to block traffic to the Otay Mesa detention center, owned by private prison operator CoreCivic, in San Diego last month.


robyn beck / Agence France-Presse / Getty Images

At Bank of America’s annual meeting in April, activists questioned executives with questions about its loans to private prisons. Andrew Plepler, the bank’s head of environment, social and governance, or ESG, said he was reviewing the company.

During the exam,

GEO Group Inc.,

which manages prisons and detention centers for migrants, was looking to modify a $ 900 million loan. The revolving line of credit was so important that a group of banks, including Bank of America, had come together to create it, according to documents filed on the securities. It is a common practice in commercial loans.

Bank of America’s ESG team reviewed and approved the deal, according to people familiar with the matter. The new gun was finalized on June 12 and the bank agreed to cover a portion of $ 90 million, according to a securities file and people familiar with the matter. The loan has been extended until May 2024 from May 2021.

Shortly thereafter, there were reports of unsafe and unsanitary conditions at immigration centers that hold migrant children.

On June 24, Sleeping Giants, an activist group that uses social media to target companies and industries it opposes, asked its supporters to email Clayton Rose, director of Bank of America and President of Bowdoin College.

Brian Moynihan, Chairman and CEO of Bank of America, in New York City on June 4.


Bess Adler / Bloomberg News

In a


post, the group wrote: “In Bowdoin he taught ‘The Moral Leader’ and advocates for ‘thoughtful engagement in civic life’. Can he comment on what is moral or ethical about Bank of America providing lines of credit to enable crimes against humanity? “

Two days after the email campaign began to Mr. Rose, Bank of America vice president Anne Finucane, who oversees the bank’s ESG efforts, told Bloomberg News that the bank had “decided to end the relationship “with companies operating private prisons and detention centers for migrants. centers. She said the bank would exit the industry as soon as possible after fulfilling its contractual obligations.

Rep. Alexandria Ocasio-Cortez (D., NY), tweeted in support of the move. GEO Group said the announcement would not affect its recently renewed revolver.

The June deal means Bank of America could be tied to private prison activity for another five years. Other companies in the industry also depend on the bank for funding, according to regulatory documents. Last year it covered $ 140 million of a $ 1 billion loan to

Core Inc.

which expires in April 2023. The bank also granted a $ 65 million loan of $ 455 million to Caliburn International Corp.

CoreCivic CEO Damon Hininger said his company has had a relationship with Bank of America for about 20 years. Meetings with the lender have become more frequent over the past two years and the company has given bankers a tour of a center serving immigrant families in Dilley, Texas, he said.

“Until last week, we were getting a lot of positive feedback from them.” he said. “This is clearly politics.

CoreCivic and GEO Group manage facilities for immigration and customs enforcement in the United States but say they do not operate border surveillance facilities or centers for unaccompanied minors.

JPMorgan Chase

& Co. in March said it would stop lending or providing banking services to private prison companies when their current contracts expire.

Wells fargo

& Co. two years ago began to end its relationship with companies. These two banks were once part of the GEO group loan, but are no longer, according to the documents and a person familiar with the matter. JPMorgan, however, remains a lender to Caliburn and CoreCivic.

Bank of America faces a similar situation with the gun industry. In April 2018, Ms Finucane, a close advisor to CEO Brian Moynihan, told Bloomberg that the bank would stop making new loans to certain gun manufacturers. Mr Moynihan later said the decision followed discussions with employees who had been affected by mass shootings.

Sturm Ruger & Co. was briefly without a line of credit when Bank of America let its loan to the gunmaker expire after the promise, according to regulatory documents. Wells Fargo stepped in to take over from Bank of America.

Yet shortly before the gun pledge, Bank of America pledged to provide $ 43 million as part of a major bankruptcy financing program for gunmaker Remington Outdoor Co., according to a court record. Bankruptcy funding replaced an earlier loan in which Bank of America participated. Activists urged people to boycott the bank. The bank has since sold its share of the loan.

The bank continued to lend to

Vista Exterior Inc.,

which operates the Savage Arms firearms division. Last November, Bank of America and other lenders made a new $ 559 million loan to the company, according to the documents. Vista Outdoor has announced plans to sell the Savage Arms business, but has yet to do so.

Write to Rachel Louise Teaches at [email protected]

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